HOA going broke

Started by EbonyJ • 11 replies • 2151 views

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EbonyJ (Tennessee)
Posts: 62

Posted:

I'm doing an informational presentation trying to explain how HOA's work and the reasons more people should get involved. Can anyone share if their HOA has went broke or any other horror stories?
Thanks in advance

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I was president of a HOA for over 2 years...Does it get any more horrifying than that???

Former HOA President

PetunkaM (Florida)
Posts: 1,009

Posted:

Quote:

Posted By EbonyJ on 07/27/2011 8:00 AM
I'm doing an informational presentation trying to explain how HOA's work and the reasons more people should get involved. Can anyone share if their HOA has went broke or any other horror stories?
Thanks in advance

Ebony,

How about structuring your presentation around ‘Protecting our property values’ Would that work in your community?

EbonyJ (Tennessee)
Posts: 62

Posted:

Yes, We are going to discuss keeping striving to keep our Property Values but I wanted some examples to share so the homeowners can realize that if we don't pay our dues, and continue to mismanage our funds, then we can go broke and we have a LOT of common area that would not be taken care of

MelissaP1 (Alabama)
Posts: 13,836

Posted:

A HOA is ONLY funded by it's members FOR it's members. There are no "They or Them" in a HOA. It is YOU and your neighbors. This is the motto I use when explaining what HOA's are about..

I also use the example of that the budgets works like a Poker game with the money being thrown into a "Kitty". Everyone has to throw in to play but the best owner with the biggest bluff wins the pot...

There are alot of different ways to explain to convey what your wanting to say. I just think using the term "Broke" is a negative term that should be avoided. It kind of gives off a vibe that is unrecoverable and it's where everything is headed. Use some more positive terms that don't invoke negative thoughts when discussing the topic. It will go over much easier than "We are going broke and losing all our money"...

Former HOA President

PetunkaM (Florida)
Posts: 1,009

Posted:

I wanted some examples to share so the homeowners can realize that if we don't pay our dues, and continue to mismanage our funds, then we can go broke and we have a LOT of common area that would not be taken care of [Ebony]

Ebony,

Well, I can give you an example. If concrete areas are broken and your insurance agent drops in to inspect the property you will be asked to repair it ASAP because it is a liability. Now, if you do not have the funds for rapairs your insurance could be significantly increased or cancelled. And, it goes on.

If the members do not pay their assessments or the funds are misused than this is a legal issue and you may have to treat it as such. And, that requires money also. I am truly sorry you have to deal with this and hope others can give you examples applicable to your situation and perhaps the owners will pay their dues without the need of legal intervention. Good luck.

BradP (Kansas)
Posts: 2,640

Posted:

Ebony...perfect example for you, i was on a board for 3 years, president for the last two and decided to focus on other things. I will be arrogant and say i was the glue that held it together cause within 18 months of my departure the board went from 7 people to 1. We went from having 6 meetings a year to none. We went from getting a newsletter and having active community participation to none. Recently a storm blew our playground away, and word spread the only board member left was getting ready to cut a deal to buy a new playground, yet we hadn't been invoiced for dues (came out 7 months late). That was it for me, we organized some folks, got a board back and discovered that most of our documents are mia...we discovered there were some questionable charges on our bank account. We have discovered that about 1/3 of the association decided they didn't have to pay dues for the past 2 years. And this is what i know now, may find more as we dig into it!

KarenT (Washington)
Posts: 250

Posted:

Quote:

Posted By MelissaP1 on 07/27/2011 8:13 AM
I was president of a HOA for over 2 years...Does it get any more horrifying than that???

Just another SMILE :-}

"If you are diagnosed with an incurable disease, and have only one year to live, get yourself elected to a homeowners association board.
It will be the longest year of your life."

BevM (Virginia)
Posts: 34

Posted:

The real horror story is that members in an HOA will have no power to regulate their life if they do not pay their dues. As an HOA, you are a "business" when the "Business" goes belly up, the courts can come in and take you over, and that means more money spent, members lose their right to vote,as there is no longer a HOA, so there is no membership. It is called Receivership. Basically there will be a court appointed management company come in and the home owners will be charged additional fees to pay the salaries of the management company, in ADDITION to paying their fees for maintenance and amenities. The management company would have to provide the ammenities that are existing, such as a pool, playground etc, and the residents will ahave to pay for them.

I would suggest trying to get the property owners to pay up. Check your state laws and see if you have the right to place a lein on their property, garnish their wages, take them to court for non-payment. We do it and it works! They miraculously come up with the money. Another thing we do is sit down with them and work up a payment plan; Let's say they are $500 in arrears, we contract with them that they will pay $50/month in addition to their regular fees until they are caught up. That way they are not intimidated by a $500.00 bill due all at once, it becomes financially managable for them, and it shows that the board is willing to work with the members instead of slapping them with a lawsuit.

MissesU (Georgia)
Posts: 17

Posted:

Do you need more stories?

EbonyJ (Tennessee)
Posts: 62

Posted:

Yes, any stories that I share with the group will help.. A HOA close to us found out recently that their management company has stolen thousands from them, and the board we have keep speeding money (w/out bids to the same people) for services the city provides, and the board recently stated that they dont understand financial statements

MissesU (Georgia)
Posts: 17

Posted:

Our community consists of 65 units and was filed and registered in 2005. The Declarant had the right to appoint the first BOD but went bankrupt and I haven't been able to find out when the management was handed over to our HOA.

I don't know how the BOD was organized when it was appointed by the builder, but as long as I have been living in the community - i.e. since August 2008 - we haven't had a President, Treasurer and Secretary but basically three members who all acted as Presidents, and we never had a proper election, which should have been held each year at the annual meeting.

Our first Management Company didn't pay our water bills (which is usually $2,000 - $3,000) for several months so that the water was eventually shut off. We have had a new MC since April 2010 which has struck a deal with the Watershed Department and after 12 months we have now finally paid off our debts.

The old MC didn't keep proper records so that a lot of information is missing.

The MC had 67 units on record instead of 65 and the number was taken over by the new MC. I joined the board 4 months ago and nobody had ever noticed. I asked the new MC whether that has had any influence on the fees we pay for the management or for insurance but I haven't heard back yet.

The MC didn't go after delinquent home owners so that now 1/3 of home owners owe the HOA $90,000. Attorneys started the collection process at the beginning of the year and several liens have been put on houses. One of the people not having paid their dues for years was a board member.

This year we have already paid $ 18,000 for attorneys and our community is practically broke.

We had a landscaping service that charged $1,800 a month for cutting the grass and for edging - no weed control - twice a month. We now have a landscaping service that does lawn care PLUS weed control and edging twice a month for $ 750 a month.

I have seen some instances where the old board members took advantage of their position since there hasn't been any accountability. I have tried hard to change the BOD so that we get a proper Treasurer but the other two members get nasty every time I mention it. Now I am trying to get the home owners involved but they don't want to have to deal with it.

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